It was feared pre-Brexit that a vote to leave the EU would immediately send the UK economy into recession. And yet here we are nearly three months later and not only are the FTSE 100 and 250 at their highest for 12 months, unemployment is at an historical low and growth predictions for the UK look very healthy. August’s economic data and surveys suggest consumer confidence has improved and there’s been a sharp rebound in the UK’s manufacturing sector.
But where does that leave you if you’re considering buying, selling, investing in, or building houses. Sometimes when predictions are proved wrong it can make it even harder to judge what you should do, and it’s not helped by conflicting views still circulating in the media about what will happen once Article 50 (which officially starts the process of our exit from the EU) is exercised.
Well let me help you by telling you about my experience and that of my clients.
Since graduating with a degree in economics and economic and social history covering world economics, I’ve been a real estate lawyer for nearly 30 years. I handle the legal work for both residential and commercial developers acquiring and developing sites – and I have never been busier. Whilst there was certainly a blip for developers in the first few weeks post-Brexit, with investors getting nervous about committing money to projects, that nervousness seems to have quickly passed. There appears to be growing evidence that perhaps it was a short term rather than long term shock. House builders, purchasers and importantly funders appear to have regained their confidence in the market.
One of my North West house builder clients, Adam Harrison of Harrison Homes, confirmed to me that whilst there there were a few wobbles in the market immediately after Brexit, saleability is as strong as ever, and indeed August has been very good for sales when traditionally for house builders it has been quiet. Adam believes any problems that developers have experienced should all be ironed out by the spring.
Indeed the picture appears to be the same for the larger regional house builders as well.
Since Brexit I have been instructed on the acquisition of no less than three potential development sites, including one for a potential student development. I am anticipating a lot more – especially as interest rates remain historically low.
If developers are feeling confident that’s a very good sign for residential buyers because without people who wish to buy and sell developers have a serious problem. Developers’ confidence is driven by the confidence in the market – people willing to purchase or make a move.
But let’s talk big-picture for a moment. The reality is our population continues to grow and people need somewhere to live. The government is looking at delivering a million new homes by 2020 – that’s 250,000 a year. Just because we now live in a post-Brexit world, those targets will not change. So that’s good news for developers which, judging by growth predictions, can expect to prosper if they build the right homes in the right locations. And it’s good news for those buyers and sellers in the property market because high demand helps keep prices rising.
Of course no one can be sure what the housing market will do long term and everyone has to judge for themselves whether to buy or sell, but there are plenty of encouraging signs. In the last week Nationwide reported that asking prices for homes in August rose by 0.6% compared to the previous month, and house prices are about 5.6 % higher than a year ago. This increase is set to be further stimulated by unprecedented cheap mortgage rates and Government incentives through repayable loans.
Every indication I am getting from my clients is that certainly in terms of the property market the fears of the remain campaign do not appear to have materialised so far.
What happens when we actually exercise Article 50 and leave the EU will rest partly on what sort of deal we can expect to get with the EU, our colonial cousins and the rest of the world once we leave. But I believe countries will be standing in line to make favourable trade deals with us.
It seems to me that after the short, sharp shock of the result of the referendum, there has been a gradual return to normality with the International Monetary Fund, amongst others, predicting a much healthier future for our country.
Of course there are losers in this game, and for many, a buoyant housing market means it could become impossible to ever get on the housing ladder. But for those who are in a position to buy, sell or develop properties, I believe there is every reason to feel confident. The post-Brexit world is far from the gloomy one that was predicted, in fact I would say it’s looking positively bright.
If you’re looking to buy or sell a property, contact us using the form below or call us on 01483 408 780.